University of Michigan Preliminary Consumer Sentiment Index Improves for August 2022

The University of Michigan today (8-12-22) released its Preliminary Consumer Sentiment Index (CSI) for August. The Index of Consumer Sentiment increased to a reading of 55.1 in August, up from its reading of 51.5 in July. This is a month-over-month increase of 7.0% but down 21.6% year-over-year (70.3 in August 2021).

The Current Economic Conditions Index declined to a reading of 55.5 in August, down from a reading of 58.1 in July. This is a month-over-month decrease of 4.5% and down 29.3% year-over-year (78.5 in August 2021).

Finally, the Index of Consumer Expectations increased to a reading of 54.9 in August, up from 47.3 in July. This is a month-over-month increase of 16.1% but down 15.7% year-over-year (65.1 in August 2021).

In remarks and analysis prepared to accompany the release of the Consumer Sentiment Index, Joanne Hsu, Director of Surveys for the University of Michigan, said:

“Consumer sentiment moved up very slightly this month to about 5 index points above the all-time low reached in June. All components of the expectations index improved this month, particularly among low- and middle-income consumers for whom inflation is particularly salient. The year-ahead economic outlook rose substantially to just above its average reading from the second quarter 2022, while the two other expectations index components remain at or below their second quarter averages. At the same time, high income consumers, who generate a disproportionate share of spending, registered large declines in both their current personal finances as well as buying conditions for durables.

With continued declines in energy prices, the median expected year-ahead inflation rate fell to 5.0%, its lowest reading since February but still well above the 4.6% reading from a year ago. At 3.0%, median long run inflation expectations remained within the 2.9-3.1% range seen over the past year. Uncertainty over long run inflation receded a bit, with the interquartile range in expectations falling from 4.7 last month to 3.8 this month, remaining above the 3.3 range seen last August. Still, the share of consumers blaming inflation for eroding their living standards remained near 48%.”